Monday, 29 April 2013

Foreign portfolios hit N4.3tr at stock market

Foreign investors staked about N4.3 trillion on quoted shares on the Nigerian Stock Exchange (NSE) between 2007 and March 2013, The Nation’s investigation has shown.

The latest report showed that foreign investors gradually and consecutively increased their investments in Nigerian equities from about 15 per cent of total market turnover in 2007 till a high of about 67 per cent in 2011.

Foreign portfolios were, particularly, the main drivers of transactions on the NSE in the past two years, with foreign investors accounting for average of two-thirds of equity transactions between 2011 and last year.

Nigerian investors have, however, made strong rebound this year, displacing foreign portfolios as the main drivers of stock market’s transactions. Compared with the situation in 2011 and 2012, when foreign investors accounted for 67 per cent and 61 per cent of total turnover on the NSE, foreign investors accounted for about 43 per cent.

Nigerian institutional and individual investors stepped up their transactions from a recent low of 33 per cent in 2011 to 39 per cent in 2012 and account for more than 57 per cent of total transactions.

The report underlined the early positioning of the foreign investors, who had saw through the prospects of Nigerian equities amid the downtrend and the rampant herd instinct of the domestic investors, who mostly usually look at recovering market.

The two-way flow of foreign portfolio investments showed that while foreign investors flowed in about N2.01 trillion during the period, they equally took away about N2.17 trillion.

Foreign portfolio transactions increased from N615.6 billion in 2007 to N787.4 billion in 2008. These trimmed down to N424.6 billion in 2009 before rising consecutively to N577.3 billion and N847.9 billion in 2010 and 2011. Foreign portfolio trades stood at N808.4 billion in 2012 and were reported at N215.6 billion by March 2013.

Market analysts said the proportionate increase in domestic investors’ portfolios would help to stabilise the market against the speculative activities of the foreign investors, though they were cautious about the tendency for domestic investors to resort to panicky portfolio reviews.